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A Medicaid managed care plan is a health insurance program offered by managed care organizations (MCOs), which have contracted arrangements with state Medicaid agencies to deliver Medicaid health benefits and additional services to enrollees. These MCOs accept a set per member per month (capitation) payment for these services.

The main objective of a Medicaid manage care plan is to improve quality of care. Contracting with MCOs allows states to reduce Medicaid program costs and better manage utilization of health services.